come assumer, not a positive piece on the cover of the "wall street journal" with just 14 shopping days left until christmas. mixed signs so far this season on spending. but on this morning's menu, a traditionally good reading on consumer appetite. we've got mcdonald's sales. it is monday, december 10th, 2012 and "squawk box" begins right now. ♪ i don't want a lot for christmas ♪ ♪ there is just one thing i needs ♪ ♪ and i don't care about those presents underneath the christmas tree ♪ >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is out today. he'll be back tomorrow. president obama and speaker boehner are not commenting about their meeting yesterday, but me members of the parties are continuing the public debate about taxes, spending and the fiscal cliff. republicans want a melt on xwiemtment and tax reform from the president. democrats insist this will not

happen until the gop agrees on a tax hike. senator dick durbin saying no deal on the debt without a tax hike of the wealthy. >> i can't tell you, i don't want to do it, the president doesn't want to do it, but we need to solve the problem been we cannot allow the reckless position to drive this economy into another recession. >> some suggesting that it might be better to cave to the president now on taxes and keep up the fight on spending. >> if we were to pass, for instance, raising the top two rate and that's it, all of a sudden we do have the leverage of the debt ceiling and we haven't given that up. >> meantime, one influential voice says enough is enough. >> that's like betting your country. there's something terribly bizarre and juvenile about that is to think your party comes ahead of your country. i don't go for that at all. >> that, of course, was alan simpson, the other half of

simpso simpson-bowles. erskin bowles will join us this morning, as well. if you have the democrats quoting him, the republicans quoting him, we'll very where he comes down and where things stand right now. >> you do simpson-bowles now instead of the bowls-simpson? >> i looked it up on going.. the more often cited is simple is son-bowles. >> the journal has an interesting piece. they don't like corker for breaking rank. they say why are republicans negotiating this themselves? they say let boehner do the negotiations. anyway, you would be hard pressed to find something who sdn have aen opinion on the fiscal cliff. this weekend, the ahead of the imf said the united states is more vulnerable to its domestic trouble more than anything else happening in the eurozone. christine lagarde says a

balanced approach is needed and she says don't kick the can down the road, which is rich coming from a european. european trading the lower this morning. italy's prime minister mario monti, yes, the same one that is famous from all the anti-trust things back in the -- was that the '90s? >> the '90s, yeah. >> monti announcing he'll step down before his term ends. the decision comes after the party of sylvia berlusconi withdrew support for monti's government last week. berlusconi has indicated he will run for leadership again. cnbc's carolin roth will join us from italy with the latest in a few minutes. when i was over there, i had to have the -- all the political signs translated because there's a picture of monti sitting under a beach chair drinking a drink and all the text was send monti to the beach. they already didn't like him. >> he had very high disapproval

ratings. i remember last summer i had seen that somewhere. >> they want to send him to the beach. the major european averages at this hour, there they, they're all down. not great in france, but germany down about .7% and the ftse down fractionally. other news out of europe, debt tieback for from an day to receive additional buyback offers. those would be at deeply discounted prices and that would help lower the country's debt lead. in asia, stocks touched a 16-month high and closed mostly higher on the session with good gains, as you can see, with the kospi up the most, 1.5 points. >> strong nebs out of china which suggest maybe the economy is rebounding more than expected. >> the exports. >> yeah. >> among the catalyst in asia trading today, economic stats

out of china. export growths slowed sharply to 2.9% in december. that news j underscores the global headwinds dragging on the economy. but the chinese economy is showing solid signs of a pick up in domestic activity. industrial output was stronger than expected. the country has been saying for years it needs to shift a little bit from the export model the internal consumption. let their middle class grow and not be nearly as dependent on exports. and china's oil demand in november surpassed 10 million barrels per day for the first time ever. the country's crude imports rose to the second highest daily rate on record. analysts say this is further evidence of the chinese recover. and i saw this story on -- every once in a while i check tweeting. >> i saw it on google, too. kayla tausche reporting -- >> kayla beat nick dunn.

>> nick dunn was quoting kayla. >> is that right? >> corporate news that we're talking about, ingersoll-rand is nearing a deal to spin off its security technology business. cnbc's kayla tausche is reporting that the news could be announced as early as today. the spin-off comes after months of negotiations with an activist investor. ingersoll-rand is planning to announce a buyback program and a nearly 30% increase in the share program. also, aig is considering selling its plane leasing firm to a chinese group for up to $4.8 billion. plus, listen to this, mcdonald's is going to be reporting november sales today. look for the numbers at about 8:00 a.m. eastern time. analysts are expecting global comps to decline .1%.

u.s. sales are seen falling by .8% while europe is expected to tick slightly higher. this was a big deal last month when they came out for their comps. it disappointed for the first time in years and years. people will be watching this number very closely to see if the consumer is still feeling good, to see if mcdonald's's managed to get that mix right. there were concerns that they put too many things on the dollar menu. they said last month they would be changing that. whole see what happened. shares of mcdonald's year-to-date, they have come down quite a bit. >> you only read two. why do i have to read this? >> i read three. >> weight watchers, possible cases of insider trading. reuters say i resemble this. reuters say authorities are investigating hedge fund for insider trading in weight watchers. s.a.t. had taken a sizable

position in the stock. cohen fund briefly held 2.1 million shares under scrutiny by authorities. at which time the stock price roughly doubled. in other huj fund news, john paulson said friday that his funds experienced mixed returns in november. we got wind of this. softer gold prices weighed on some portfolios. not much time for -- the predictions to be right. >> some will do well based on housing, right? >> yes. everybody said gold was going over 2,000. it didn't. the merger, arbitrage focus partners fund climbed 1.4% in november and is up 6.7% for the year. the firm's biggest portfolio, the credit opportunity fund was flat for the month. it is up 5.6% for the year. >> i like that. >> yeah b, i got weight watchers and twinkies.

if you want to see the twinkies table, this td is it. this is the official drop dead date for those making an offer for the baker. there are nearly 200 interested parties, but sources close to the process are anticipating a few dozen real committed bids will emerge. kayla tauschis will join us in the next hour with a look at twinkies and the other hostess brands, the products buying attention for buyers. >> apparently the products that are most wanted, the brand that is most wanted is not twinkies. i don't know what it is. >> i'd like to know what it is. >> i've tried them all. >> i was reading through overnight notes and i'm dying to ask kayla this. >> funny bones? >> i don't like peanut butter ones. i remember them being too dry. >> too dry? i had some of those orange cup cakes. >> oh, yeah, those are good. >> cream filling. >> the same one as the regular ones, just orange, right?

>> the regular ones are dork chocolate. >> but these are the orange. >> all we got were the orange ones. >> so we're going to find out which one is drawing the most. we'll get that one from kayla in the next hour. by the way, you know libor and the scandal surrounding the anticipated of it. have you heard of the euro bor? it's the euro interlibor rate. and the euro may accuse banks of setting the euribor, as well. by submitting incorrect data and collaborating with each other were widespread. probably not a surprise if you knew it was happening with the libor. this will bring the tally even higher in terms of the expected fallout for any litigation that could follow on this. also, the united states and britain teaming up on a global strategy to handle too big to fail banks. today, u.s. regulators are

outlining a deal on both sides of the atlantic to take losses and ensure efficient capital exists in the bank's headquarters to protect taxpayers. the bank of england and fdic are suggesting the plan would reduce financial stability. >> too big to fail. >> i have to admit, i'm a little bit concerned because he was supposed to be back today. >> he was. >> in a foreign country. and i don't know this for sure, but have you ever seen midnight express? >> i have. >> you have seen that movie? i don't know. he's on a bus. he's got stuff taped to him. andrew was supposed to be here. now, i don't know whether anything happened as he was trying to exit this run. and i don't know what he was trying to bring back. but it is a country known for -- >> he was probably bigging back a gift for you. >> maybe so. but all i know is he's not -- i can go to washington state for

that. i don't need andrew to bring it back. but i'm a little bit concerned. do you remember? >> i think he's okay, i hope. although i did hear some weird things about the plane. >> have you ever been to a turkish prison? i think that's lt from "airplane," right? actually, i have nodenc support this that he was busted trying to leave the country. >> have you ever been in a prison? >> there it is, the turkish prison. i made that up. >> no, you did make it up but i am concerned because of the plane issues. he's a nervous flyer as it is. >> that's right. >> if there's plane issues -- >> but you don't think they went in and stormed the plane and dragged him off? >> i don't think so. but he will be back tomorrow. okay. back here in the united states, there is a key senate vote expected today on extending a financial crisis era blanket guarantee on nearly 1.5 trillion in deposits. the fdic's transaction guarantee program, or t.a.g., expires at the end of the year. small banks are making a last

ditch attempt to try and persuade congress to extend it. t.a.g. sdpofts make up many of the banks total deposits. if congress doesn't take action, the fdic will stop making guarantees on zero interest bank accounts and services. the guarantee will revert to the normal $150,000 for insurers at any given bank. if so-called t.a.g. money leaves these banks, then the troubled list might find a lot more names on it. but, again, these were all temporary things put out there. it has been four years and counting since the financial crisis. at some point, you expect to see these things reverse. the federal reserve dominates this week's calendar. the fomc will gather for a two-day meeting tomorrow. the fed is expected to maintain its bond buying at $85 billion a month, replacing operation twist with purchases of longer term

treasuries funded by new money creation because they're running out of these longer things to twist into. they're going to have to start creating money or twisting money, whatever you want to call it. chairman bernanke will meet on wednesday afternoon to cover the federal reserve's positions. we'll cover that live. right now, dow futures down by 35 points. s&p down by 45 points. oil price these morning, they are up slightly. they're up 39 cents to just $86.32. a lot of concerns about the consumer, though. it's still pointed out that there's a story of the front page of the "wall street journal" about weakness. we'll continue to watch a lot of these numbers that come out, though. you take a look at the ten-year note this morning. right now, the yield is 1.605%. the dollar this morning is indicated down across the board. euro is at 1.2911. and gold prices, which we've

talked a little bit about this morning, are up to 1,710.40 $1, ourls ounce. and you did have the contrarian call last year. >> yes. >> you went against the grain. time for the global markets report. kelly evans is standing by in london. what did i say, the ftse was up a little. nothing to write home about. >> joe, i'm sorry, it's nothing but a sea of red overhere. mario monti's decision to resign over the weekend is having quite an impact on markets. i want to show you those who are most affected. i know carolin will join us with the political details been but here are the market's verdict. you're seeing the eye toolan tanks taking it on the chin. a couple of them were halted in trade earlier after being down more than 5%. now, this, of course, is one reason why the ftse mib, which we can show you is the weak performer today. down 3.4%. so pretty damming indictment of this decision over the weekend.

the ibex down over the weekend. so spain and portugal, seeing its index down over more than is % is showing its concern. joe, the ftse is at least holding up relatively better. it's down only .3% today. these losses follow a trading session that was setting up to be relatively strong. we saw asian stoxx doing decently well, so just kind of underscores how unhappy the market is this morning with this news out of italy. look at what's happening with debt. as we check in with bond markets, the italian tenure is seeing its yield rise. 4.88%. i know it doesn't seem that high, given some levels we were at last year. but if you consider that we've risen, i don't know, in the range of 30 to 40 basis points or .3 percentage points just on this news, it is pretty significant. spain, same thing, we're seeing 5.67 about the level there. other bond yields are benefiting as a result. back over to you guys.

i'm sure carolin, too, can help us try to understand now what this all means with mario monti potentially still involved with the next eye toolan government. that may help reassure the markets somehow. >> thank you very much, kelly. we are looking forward to that. right after this, we will be getting that live report from rome. that's where people are starting to figure out, the politicians are out in force campaigning for life after mario monti. but first, today is forecast to be the busiest shipping day of the year for fedex. yikes, that's a reminder that i am way behind on my shopping. courtney reagan is spending the day at the company's center in the bronx. are the packages flying? >> not yet, but the big sort happens in just about 15 minutes. the kre o fred smith thinks this will be a record day in fedex history. i have the details as fedex fills in for sana clause up next. toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing

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welcome back, everybody. take a look. 234 our headlights this morning, new york city mayor michael bloomberg is considering whether to make a bid for the "new york times." the ft's publisher is about to lose two of its top executives, raising speculation that the newspaper could be up for sale. eric fisher joins us from the

weather channel this morning and, eric, it was not cool out here today, but i did see a lot of rain. is that around the country, as well? >> it is. we're watching winter storm caesar. this is what it left behind. blizzard conditions around south carolina and north dakota. over in minnesota, we have anywhere from 8 to 17 inch snowfall totals. a lot of cold air behind the system. eventually that will get over towards the eastern seaboard. 12 in minneapolis. 8 and below in international falls. you get over towards chicago and into des moines, st. louis, gusty winds bringing those windchills way down. winter finally showed up here across the upper midwest. here in the northeast, there's the rain we were talking about around boston. a little bit of a break this morning. the biggest storms across the south, places like atlanta, into birmingham, nashville, jackson and new orleans all dealing with some very heavy rainfall. also had a tornado warning earlier on today in mississippi. so severe weather is our our minds here.

southern tennessee. we could see damaging wind gusts, isolated tornados and certainly quite a bit of rain. the last note for this morning, snow in texas and oklahoma. around dallas, it is moving into the city. a quit hit of snow around the early community time, so folks have to be careful on the roads there. back to you. >> that's a little weird in dallas. what about -- bring it down, bring it down to colorado. can you -- is that expected, snow there? i mean, this is a good sign, right, 8 or 9 inches this early in minnesota? is that a good sign, eric? >> it is a good sign. it was the fourth biggest december storm on record in minneapolis and then in colorado yesterday. they got over a foot of snow? >> what did? >> ski areas, they are finally seeing a little bit of good news. >> that is good. that is good. all right. and it's headed here. all right. excellent. at least the cold weather. you know, rain, raw days, 38 degrees. >> this time of year, i'm happy about that.

>> i'd rather have snow. >> 48 degrees with the horrible rain, it chill tess bone. >> but the snow comes in early in the morning. >> my backyard, three dogs and a muddy backyard. today is expected to be the busiest day for shipping for the holiday season. fedex will have 19 million deliveries. courtney reagan joins us live from the distribution center in the bronx. they haven't asked you to pitch in or anything, yeah? >> not yet. i'm not sure i'm totally dressed for that, so i hope that request does not come down my way. but in a couple of minutes, you'll see this morning's big sort come down the layer belt. it will be loaded foup for delivery toes be made in about two hours on what the company expect will be a record breaking day. >> we publicly forecast a couple weeks ago that on the 10th we would move 19 million shipments through our networks. that's up about 11% year other year.

ecommerce is causing a significant amount of growth. retail sales are going to be up some place in the 3.5% and 4%. >> so as fedex fill necessary for santa claus, it's more than 300,000 workers will start loading up packages. more than 200,000 per second to be delivered today. and fedex counts today as its bus is heist day of the year because of any orders in the system at any point. that includes packages being shipped today that were from cyber monday. as well as orders that come in today from those green monday orders. this is a little bit different from u.p.s., which counts its busiest day as december 20th because it measures busy by the number of deliveries that are being made. now, we should note that it is also green monday today. so a lot more shopping will be done today. and as history proves, the trend has continued. come course chairman dan figoli

expects more than a billion dollars in sales will occur today marking the third busiest shopping day of the season and, in fact, the year. >> courtney, thank you. if it was a little darker, your outfit, it could be a u.p.s. thing. but that's a fedex khaki thing. but if the trucks tell you to do something, no, you're there for a reason. >> i am here as a reporter. i'm not that strong. we don't want anything to happen. good point. >> thanks, courtney. we'll see you later. the moral turpitude, the soelt has declined. google, commemorating linda lovelace. >> oh, wow. >> i don't know. that's what -- >> really? >> oh, wait a minute. wait a minute. ada lovelay. >> you tricked me into that. >> is that different? >> yes.

>> wait a minute. this woman was -- yeah, yeah. no. totally different. >> she's the author of the first computer algorithm. >> oh, my bad. my bad. yeah, she helped -- >> she would be 197. >> she helped the design of -- yeah, she would have been 197 today. >> do you know who augusta aida king, countess, have you heard of her that much? i see lovelace and i don't think of the countess of lovelace necessarily. but google is like that. and i got you. >> and you got me and i fell for it and i should have known. >> oh, man. coming up, a live report from rome. >> i should know better. how long have i been sitting next to you? >> why europe is paying close attention to who will follow mario monti as italy's prime minister. but here at home, a very big difference between president obama's first inauguration and the one being planned for next

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[ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. mario monti. good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick. andrew ross sorkin hopefully will be back tomorrow. we'll get an update throughout the show.

among the top global market stories this morning, italy's prime minister, mario morety announcing he's going to step down after his country's budget is approved and before his term ends. cnbc's carolin roth is in rome with the latest. and congratulations and hello, carolin. we're always the last to know. >> joe, it's actually been a couple months, but thank you very much. thank you very much. >> how come we haven't seen you? >> we've live in rome today all day because we're covering -- you may not have seen me, absolutely. so we're seeing a big selldown in italian assets today. banking stocks are down to the order of around 5%. and there's a clear negative reaction to the news that mario monti unexpectedly resigned over the weekend. that is after the budget law has been parsed in parliament. at the same time, controversial

former prime minister berlusconi said he was staging a comeback and that's why markets are worried, specifically because they don't know whether the next government after technocrat prime minister monti will continue with his tough austerity measures. i would say that some of the fears in the market today are overdone. if you look at the latest opinion polls, you'll see the democratic party under bersani, they would win the elections if they were to be held today. they're pro europe, pro austerity. so berlusconi doesn't even have a chance of winning at this point. back over tow. >> all right, carolin. thank you. yeah. she hasn't been on at all. >> no, we haven't seen history in a while. that's why we're the last to know. >> and you finally did it. congratulations. all those guys you had been dating, she had called them euribors, until she met this guy, right? this guy, roth, stole your

heart, right? what's his first name. >> he did, he did. i'll tell you off air. is that okay? >> all right. that's fine. thank you. >> thank you very much. back here in the united states, president obama and house speaker boehner spending a sunday together to talk about the fiscal cliff. no word on any progress and the president will be in detroit today to speak about the economy. joining us right now is cnbc's chief washington correspondent john harwood. john, you had a great column over the weekend in the in, times whether you took a look back at what happened in 1990 where things were set up for a grit debate but maybe things were easier at that point because you didn't have the 24-hour news cycle. you had other things that made it easier the last time around. what does that lead us to think this time around? >> well, there are ways in which it was more difficult, as you just alluded to, becky. but there are a lot of similarities, too. there are warnings that the

economy is going to take a huge hit if a multi year budget deal was not enacted. you had a republican party led by a president who had made a no tax pledge and who was trying to figure out a way out of that. when he finally did that, that's when the negotiations took on a faster pace. and i do think here the fact that boehner and president obama met yesterday on a sunday is an indication that there is a prospect for a deal. the question is going to be what does the white house give john boehner, offer john boehner in terms of entitlement cuts that he can use to bring along his caucus? it's pretty clear from the cracks in republican ranks, becky, that republicans are going to give ground on tax rates for some group of wealthier americans, maybe half million dollar incomes, maybe million dollar incomes. but boehner to the speaker to bring along his caucus has to say here are the spending

concessions that i want and i think that's what this set of conversations is about. >> john, it was interesting to hear it from senator corker saying, yeah, we should hold the fight on spending. you about he did it on the assumption that you're going to have this debt ceiling crisis that comes up again and these concessions that come up in i guess february. the president in his initial offer laid out something that he had to say the debt ceiling would be part of that, too. would he have back down and say we could have this conversation again in six weeks? >> that's a really hard issue. he said in the same definitive rates that he said tax rates have to go up on people at the top, he said i'm not playing that game on debt limits. but that's a tremendous amount of leverage for republicans. arguably to the detriment of the country, we saw what happened in 2011 when we had a sail mate over the debt limit. we had a downgrade of u.s. credit. the president has also said, through his aides, that he doesn't believe he could do it unilaterally with executive

authority. so then the question is going to be, what does it take to get republicans to agree? and if john boehner needs a concession from obama to get his people to go along wax rate increases on million dollar incomes, he's going to need more of a concession to get them to go along on a permanent extension of the debt limit because people see that as the one tax stop lever they have to put pressure on democrats. >> so i saw some of your tweets. did you almost start crying? how scared were you with the -- >> are you talking about the ball game? >> yeah, i'm talking about the knee. >> yeah, well, i was scared. >> petrified. >> it looked bad. >> what happened? >> rg3. it's not a serious injury, right? not an acl or -- >> the redskins did an mri last night. they came out and said his acl and mcl, neither was torn. so, you know, it appears to be a

hyperextension, which, you know, i would guess it would keep him out there week and maybe another week, but i don't think it's a catastrophic injury and you might have noticed, joe, we had quite a good backup quarterback, a rookie from michigan state, kirk cousins. >> and we've got johnny football, freshman. >> freshman, won the heisman. >> he could win four heismans. >> i was hoping your bengals were going to help us out yesterday. >> you know what, john? i was hoping you were not going to bring that up. i've heard people say this, i want my three hours back. i want my three hours back. they were leading until zero time. they were leading until zero. i mean, that's -- if you've been a bengals fan for 20 years, nothing surprises you any more. they were so much better than dallas through the entire game. i feel okay because dallas wag was dealing with some stuff and maybe they won it for the guy

that unfortunately lost -- you know, i could see they were playing a little bit inspired. it's better that the bengals do it now than in the first playoffs game. >> the jets won yesterday keeping their playoffs alive. >> here is my question about the bengals. do you see them as still on the rise? >> you didn't see the game? because they were -- i mean, they got a great defensive line, they sacked toney romo. they had him under pressure. a.j. green, who is great, dropped a bunch of passes and they had about three or four dropped interceptions that would have turned it around. they didn't convert some third -- i watched the whole game and as i said, it was devastating for just a regular season games. >> i've been a bengals fan, seriously, since ken anderson. >> gregg cook. >> yeah, craig cook from the university of cincinnati. i remember those guys. i loved them. bob trumping, chris

collinsworth. john harwood, thank you. and i was happening that rg3, no real damage, hopefully. comments, questions on anything you see here on squawk, e-mail us, squawk@cnbc.com. still to come, one of the most cited voices since the fiscal cliff, erskine bowles. he he loves the rise above. first, we're going to head to the futures pits in chicago and see which stories are most likely to drive today's trading. as we head to break, some of santa's friends dawned swimsuits this weekend to take part in the santa claus run in budapest, hungary. they did their best to keep moving in below freezing temperatures. to the best vacation spot on earth.

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welcome back, everybody. u.s. equity futures at this hour show the dow futures down by about 28 points. nasdaq off by close to 7 points. s&p futures are magically weaker, as well. in our headlines this morning, the average price for a gallon of regular gasoline falling over a dime in the last three weeks. this follows a drop in crude oil prices and a output in refinery output. joe. let's get to the futures pits. jeff killberg of killer capital. you know, you spelled capital wrong in your name. i guess that was inadvertent. how should traders position themselves? i hear some of the people that are a little mover reactionary, they say capital gains rates could go up so much between now

and the end of the year, many stocks could make advances because people will be selling. >> joe, although i'm very distraught at mantea's loss to the height man, i see seller's remorse. a lot of people are worried about that and rightfully so. but additional measures as well as we see some type of resolution out of washington, you could see a nice pick up here in the s&p and that could catch some shorts on the run. >> i wonder about that. with boehner was at any time we could hear that maybe a deal is close or a deal gets made. but, i mean, capital gains no matter what are going up, aren't they? >> that's inevitable, right. and you're seeing one things in the bits here behind me, which will be very loud here this afternoon, the treasury pit is an overcrowded trader now. that was opposite of the last year and a half. being bullish on bonds was lonely. but right now, folks are being

very -- it's very confusing to go to the dollar index. it's going to be devalued. right now you're seeing the long end of the curve. that's the focus we're looking at. the long end of the curve should let out. the front door's balance sheet is clearly expanding, but the duration, we want the clear end in duration on a big bet on wednesday. >> and i wonder what -- i mean, i think about this now that there are some companies that have said the plan for the first half of 2013 has been tempered by debt ceiling worries, fiscal cliff worries. we know there will be a little bit less money in the economy because even if we get a deal, we know tax rates are going up. so i wonder, even if a deal with done, i wonder how much umph the market -- it really gets from that knowing that we're headed into just troubled waters for most of 2013, i would say. there's this notion we have all this trillions of dollars on corporate balance sheets. and it's just going to be unleashed. i wonder how much that's offset

by the damage already being done. >> no, certainly, and that may be priced in just like you said. but i do think we will see a bump up here on the equity markets and some thin volume. hopefully we see santa claus reality, but to speak specifically to be shorter investment, if you see some type of resolution, there will be a knee jerk reaction. look at the s&p level, 1460. we could go test that in two days, joe. it's not that far away from where we're at right now. >> you just look at what's happening in apple, all the people that have gains there, they're almost ignoring valuation and what's going to happen. it seems almost simple right now. >> well, the apple trade is more like the new vix. that's the barometer. >> but if i had a big gain, and if i just did the math and i had a big gain versus whatever it is, 20% versus 40% or whatever, do we even know where it's going to go?

>> well, we have that conversation with clients all the time. you check that out, are you going on a 1.6 ten-year yield right now? it's per flexing. but i think this trade will be on in the treasury pit behind me. >> jeff, thanks. >> all right, joe. >> see you later. when we come back this morning, kayla tausche will join us on more with a story she first broke this weekend. ingersoll-rand to break off its security business. but first, the ceremony was held in washington, d.c. this weekend. a candlelighting took place near the white house.

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kayla tausche joins us in the chair this morning with more of her reporting on ingersoll-rand. what are you doing? hi is anything going on with ingersoll-rand? >> like hotel lobbies and restaurants, poke around the tables, see what people --

>> i didn't think about ingersoll-rand a single time this weekend until i read what you were saying. >> i'm actually surprised you even read my story. but that's a start. >> i'm glad that nick had to cite you. i already talked about that. it's kind of late that you had the scoop and he had to follow along with chat kayla already said. >> it was interesting. there was a story in the "journal" on friday which initially sparked me to write the story, basically, back in august there was a story saying he had basically reached a deal with the company to keep the firm intact. and my sources were saying that that wasn't necessarily exactly what was in the pipeline and that actually we could see as early as today an announcement that the company will spin off its security technology business. so this is the smallest whole business segment that ingersoll-rand has. it has been selling off pieces of that business. looking at the filings, it has about $1.5 billion in revenues for the trailing four quarters. it's still a relatively successful business. it makes things like locks, and, you know, steel door frames for

things like hospitals and schools. and so it makes things like that. it hasn't done as well because of the choppy recovery. those are technologies that companies and residents and consumers aren't necessarily investing in right now. but that could all change with the housing market recovery. stocks up this year so the rationale that peltz had originally for a full breakup doesn't hold as much water. but ingersoll is committed to returning capital shareholders. >> how big is the overall company in terms of revenue? >> it's about i would say probably 20% of the overall. >> that's pretty significant. >> so it is a significant spinoff. ingersoll is also expected to boost its share buyback program by about $2 billion, and also increase its dividends. so, an interesting story that we could see come out of the pipeline as early as today, maybe tomorrow. >> proof that investors still have quite a bit of clout. >> exactly. exactly. >> what are you -- >> i was looking at a couple of

stories. first of all, we talk about the fiscal cliff all the time. we know it's a big deal. but maybe there are some signs that it's an even bigger deal at this point. there's a story on the money section of the "usa today" talking about investors peering over the cliff at this point. the markets have kind of hung in. now there is this concern that if there's not some sort of movement, or some signs of movement pretty quickly, maybe the market also react. and then there's also the story on the front page of "the wall street journal" talking about how consumer spending is finally showing some signs of cracks. now we know that when first -- we first saw things starting out right after thanksgiving it was pretty strong sales. now the reports have been more mixed. on friday there was a preliminary measure of consumer sentiment from the university of michigan that showed a big drop after four months of gains. i can't help but wonder if that's because of all the coverage of the fiscal cliff and how much it plays into the news media. at this point maybe that's a sign for washington, guys, hurry up and get something done, because this really is starting to matter. >> can't emergency until maybe just recently did anyone really said, wow, am i going to get

junior this gift? >> everything we talked about is how consumers were still hanging in. but it's two-thirds of the economy. >> a couple weeks ago, consumers and businesses alike weren't really investing. they were only spending exactly what they had to to sort of get themselves to the end of the year and that any longer-term investment really wasn't happening. they were putting it on hold. >> where are you on the aussie discharge? >> oh, no. >> the ones who called up and crank called -- >> well, i do believe that, you know, they had to think that they weren't going to get through. i made a prank call in my day and most of the time they find you out or hang up on you right away. >> initially there was the piling on, and it's the twitter sphere and really, it's very sad that this individual -- >> no one could have known that this would be the outcome. >> that's what i mean. people get crank calls and you think maybe there's goat to be a little something that was there before the crank call that would

position -- >> it seemed that the palace wasn't even that angry over it. prince charles made a joke about it. >> you know, prince charles -- you know -- >> and the corgis. >> and you call up, oh, she's got a tummy bug. i just think they big -- and they're both crying, supposedly the female, the mel or whatever her name is, she's like suicidal now from what happened. and you would almost if you thought that you were responsible for that. i've gone back and forth on it. you look at what howard stern pranks he plays, and any of those could go wrong at any time. you know. and the public craves that. that's what gives ratings to these guys. so, anyway. i just wondered. all business all the time. >> industrials to the fiscal cliff. >> exactly. a quick break now. the morning's top stories when we return. that's what we'll have. >> plus the man of the hour, erskine bowles. find out whether he thinks washington can avert economic disaster. the courage to rise above when skwaux box returns.

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working the weekend to rise above. president obama getting together with house speaker boehner. no word on progress. >> just want to tell you good luck. >> erskine bowles of the simpson-bowles commission is our guest. he wants both sides to get their act together fast. >> we can't have anyone freak out out there, okay? we've got to keep our composure. we've come too far. there's too much to lose! >> plus, reaction from california republican congressman kevin mccarthy. >> this ain't over yet. >> and who has the best shot at getting twinkies back on the assembly line? we have the latest on the

hostess saga as "squawk box" begins right now. and good morning, welcome back to "squawk box" on cnbc i'm joe kernen along with becky quick. erskine bowles. erskine bowles will join us in just a minute of simpson-bowles, bowles-simpson, take your pick. futures right now this morning have been relatively weaker all morning long. things in europe, sort of setting the tone for the markets. here are your morning headlines. the planned resignation of mario monti, the italian prime minister, is what's weighing on european markets this morning. monti says he'll step down as soon as the 2013 budget is approved, and that sent stocks lower and borrowing costs in italy and spain higher. as you just heard from kayla, we were in chairs, ingersoll-rand is planning to spin off its technology business.

the security technology business in a deal that could be announced as soon as today. kayla tausche of cnbc reports that the deal would follow pressure from activist investor and "squawk box" guest host nelson peltz. kayla also says that the company will likely announce a $2 billion share buyback program, and a 30 % dividend hike. and the newest james bond film skyfall remained at the top of the u.s. box office this past weekend. it took in $11 million in north american ticket sales also became the highest grossing movie in the history of sony pictures. >> all right let's get straight to our newsmaker of the hour. he is one half of the simpson-bowles commission and he wants to fix the debt before the end of the year. erskine bowles is the co-founder of the fix the debt campaign and co-chair of the national commission on fiscal responsibility and reform. and erskine it is a pleasure to have you with us this morning. >> thank you, becky. becky, can i ask you a question? >> you may. >> was that a picture of joe running a santa claus race over there?

>> ah-ha! where's your button? do you have your button on today, erskine? >> i have it on my coat. i didn't wear my coat. i've got it on my coat. >> you wear it everywhere, don't you? >> i wear it everywhere. >> you seeing any of that, erskine? >> look, i think the atmospherics are getting so much better. we've kind of got down to the kabuki theater and moved on to, you know, dancing the tango with the guys. any time you start to tango you got a chance. >> when we've talked to you in the past you said that there's probably about a 33% chance that we go over the fiscal cliff. you are sounding a little more optimistic. what do you think the odds are now? >> oh, gosh, i probably, you know, i probably think it's more like a 40% chance we'll likely get it done before the end of the year, probably 25% chance we'll get it done right after the end of the year, and then there's that horrible 35% chance that we'll still go over the cliff and have real chaos. but i think the chances of

getting it done now are better. and i think that's -- >> and there have been so many people who have been citing you, erskine, as the authority on why their view is correct. we've heard this from democrats. we've heard it from republicans. everybody is citing you as saying, see, this is why my plan is the best. which is why i'd love to hear from you what you think about all the plans that are out there right now? my guess is you think that there needs to be more spending cuts that are put on the table. >> there needs to be. you know, we got to have revenue. we got to have spending cuts. this is arithmetic. it's not that hard to figure out. look, i'm more encouraged. the president has, you know, he has made it clear he's drawn a hard, red line, if there's got to be some increases in rates. but the good news is he's turned right around and said, look, next year i will sit down with chairman bachus, chairman camp, and see if we can negotiate a tax package that will broaden the base, simplify the code, wipe out some of this

inefficient, ineffective spending in the tax code, and use that money to reduce rates, and also hopefully reduce the deficit. and you know, the speaker has had, you know, rates on the -- i mean, revenue on the line for a long time. but again, if you look at his proposal carefully, there's no mention in there of premium support or block granting medicaid to the states or huge cuts in the income support programs and the president on the other hand said look i'm willing to talk about doing the right thing on these entitlement programs. cuts there. so again the atmospherics among the two guys is better. and then if you look at the people on the outside, they're republicans talking about rates. that will help the speaker. democrats like senator durbin, very close to the president, talking about the fact that he can live with means testing in medicare. that's number one. on senator mcconnell's list of things he'd like to see done. nancy pelosi is even talking

about, you know, it's not about race. it's about revenue. it's about getting the money we need to reduce the deficit. so atmospherics are better. we've got a chance. >> it sounds a lot better. we also try and figure out what the plan actually looks like just in terms of the ratio of spending cuts to tax increases or revenue increases. and there've been a lot of people who've gone back and forth. it started out where we were probably closer to three to one back last summer. and i thought that was what simpson-bowles laid out. then i've also seen something that was circulating last week, suggesting that the simpson-bowles plan really called for a one-to-one ratio. is that true? >> no. what we did is, we took current policy at that time. current policy at that time and bush tax cuts from the top 2% expiring and we took that as the baseline, and then what we did is we reformed the tax code so we could broaden the base, simplify the code and we got about $1 trillion of new revenue coming in, and we got $3 trillion of spending cuts.

that gave us our $4 trillion package. we didn't have any monkey business or any gimmicks in there like drawing down the troops in afghanistan and iraq. we had a real, $4 trillion. and the reason we had $4 trillion in there is that's not maximum amount we need to reduce the deficit over the next decade. it sure isn't the ideal amount. it is the bare bones minimum you need to red the deficit in order to stabilize the debt and get it on a downward path. >> well, can i just clarify that because the number i was going back to was something that ezra klein of politico had written last week that i've seen reprinted in just about every newspaper across the country. he said cbtt calculation comes down to $.9 trillion in spending cuts, $2.6 trillion in tax increases and that's 1.1 to 1 in terms of that rash crow. is that wrong? >> i don't know how he gets to that. i've seen people, you know, count it as 1.8 because they count what we had in the baseline before we reformed the

tax code. you know, that might be fair to include, but again i think that's about as much as you could possibly say is in there. >> i'm going to call it bowles-simpson. when you're here i call it bowles-simpson, and alan goes back to simpson-bowles. does that make sense if you could use ert, erskine? >> no, we really don't like to call it bowles-simpson. everything in washington identifies with initial, we better go with simpson-bowles. >> who would ever characterize anything in washington as b.s. that's such a stretch. you know, i wonder what's more anathema to the president or to the left, whether it's the 2% rate, or whether it's some of the entitlement cuts that are in bowles-simpson? and i think both are deal breakers, to really get that done. do you see that differencely? >> you know, i think this -- i think there is a hard, red line

on this raising rates on the top 2%. and i couldn't tell you if he's got collectability there or not but i would almost guarantee you that rates are going to go up for the people in the top 2%. >> but is the person -- erskine, that represented the -- you know, you're the bipartisan, you got alan and then you have you, do you make the case that broadening the base and lower rates with fewer deductions, is that the type of policy that would be good for growth? because we've thrown -- i don't even think people believe that anymore, that there's any merit to the argument that if you go lower and broaden the base with fewer deductions and loopholes that that's actually pro-growth. they seem to just cast that aside and say nah, we're not interested in that. >> look, i think a lot of people are still interested in it. you can just look at the math. you know, we netted $1.3 trillion of income tax income coming in last year.

about a trillion one from consumers, about $200 billion from businesses, and people always ask me, how can our nominal rates be so high and when net such relatively little amount of money? and it's because we have that $1.1 trillion of back door spending. >> if you wipe that out, you will have a much more efficient, much more effective, and most importantly, a much more globally competitive tax code than we have today. >> all the sacred cows in there, and the deductions, make people think that you need to go back on the 2%, you need to go back to 39.6 and you need to get rid of a lot of deductions just to get to the numbers that the president wants. >> well, i think tom coburn makes a good point there. gives you much more money to work with in order to broaden the base and simplify the code and bring down rates. >> are you, erskine, this is kind of a hard question, and you might be touchy about this, but -- and i'm going to be politically incorrect because i'm using the term reservation. i guess it's a native american

allusion. are you on the reservation with this white house? or are you off the reservation? because you've criticized them for not immediately being more serious about adopting the findings of their own commission. you feel like you get as much respect? do they listen to you? all can you get through? will they say yeah, put them right through? >> oh, yeah, i talk to jack frequently, i talk to the president several times. you know, we don't agree on everything. but, you know, again, you know, i go back to giving these guys a lot of credit. they're the ones that appointed this commission, they're the ones that gave people like me and allen a voice. >> then they told you to shut up. r >> well, they never tell me to shut up. but we don't agree. and you know, i'm not trying to get a job anywhere. i'm not running for any kind of office. and so what i can do is say what i really believe, and what we need to do for this country. >> you should get a job.

it should be treasury secretary. >> no. >> no, you should. >> i'm down here in north carolina. >> you should. i bet the markets would go up 1,000 points if that happens. >> might be good for me. but i don't want to see that happen. look, i feel like that old saying, i enjoyed about all i could stand in washington. >> yeah. all the b.s. in washington. that's right. but we got -- all the s.b. >> you know, erskine, when you look at what the odds are, the argument in the past has always been, i needed to talk about this a little earlier this morning, the idea that we will get some sort of higher rates now. the argument from the republicans has been if we agree to higher tax cuts now and agree to spending cuts later we're going to get the short end of the stick because that never happens. what do you think is the fair way they should be thinking about this, and a realistic way? >> i think if they agree to higher rates now in some form that you'll see these others fall into place really quickly.

the president has signaled he's prepared to do some things on entitlement cuts now. i could envision some that he would do. you saw, as example, i don't think durbin would have been out there saying that he could live with something like means testing if he wasn't serious about it. >> mm-hmm. >> i would like to see, you know, i'd like to see something done with this dpi. i think that's something that could be done before the end of the year. i think age is probably harder to get done before the end of the year. >> you mean pushing retirement out to years later, maybe? >> yeah, yeah. and having the right kind of protections in there for people who have these back-breaking jobs. >> right. >> yeah, as we recommended in our plan. that's a little harder to do with supreme court rulings, and the availability of insurance from some of these exchanges that may or may not exist in the states. >> you also had, yesterday, senator corker making the rounds on the sunday talk shows, too, and his statement was this idea that he could see going ahead and giving on tax rates now, as

a republican that's a big deal for him to break ranks and say that. but he also says that we've got the debt ceiling talks that are coming and we should hold their feet to the fire with that in terms of getting the spending cuts we want. but the president's first plan laid out the entire idea as the debt ceiling has to get done with this now, too. can you see a deal getting done and then having the debt talks coming up, or the debt ceiling talks coming up about six weeks down the road? >> oh, boy, i tell you what, if i were to -- what i care about is reducing these deficits. i think if we do that, the markets will look at it, and not only will we have explosive growth in the markets, we'll have explosive growth in this country. the only thing standing between america, i think, and really growth is having a long-term fiscal plan. what i would like to see, and i really like bob corker, he is a great guy, he's the kind of person we need in the u.s. senate, but i'd like to see some of these cuts locked in now, and i'd like to see some of this entitlement reform locked in

today. i don't want to see all of that wait for six weeks. >> hmm. what's the right level for dividends and capital gains, do you think? should they be lower than ordinary income? >> look, i think what you will see is i think they'll both probably go to 20% would be my guess. i don't think you'll see dive dinds go back to ordinary income rates. >> is that okay? >> that's part of bowles-simpson or simpson-bowles, put it back at ordinary rates. what's ordinary rates coming down to? >> we brought ordinary rates down to 23%. you know, that's a horse of a different color. ordinary rates are going to be -- >> is it 23 or 28? that's another thing we always hear. >> well, what we put out is what the zero option was, which got it down to 8% of $70,000. 14% up to $210,000. and a maximum rate of 23%. we also put out an alternative proposal which shows what it

actually costs where we kept the earned income tax credit, the child tax credit, the mortgage interest deduction and on the charitable deduction and on the health care deduction, and that we took rates to 12% of $70,000. 22% up to $210,000. and a maximum rate of 28%. it was kind of just to show people that these deductions aren't free. >> you might not have been off the reservation. but they're watching now. you are off now, my friend. you are so gone. erskine who? anyway, we -- i can't believe that could actually be done. we've heard everyone say that that's just -- there's no way that the math has to be so fuzzy that, you know, that two plus two would have to equal eight or something to do it that way. >> joe, mathematically it can be done. the hard thing is can you really get these guys -- that's what the president worries about. will they actually get rid of these expenditures? that's why he wants to raise rates now. he wants to lock that revenue

in, make sure it's actually there and then he's willing to talk about, you know, how we can reform the tax code. but i think he justifiably is worried, will these members of the house and senate actually do something about charitable gifts? will they do something about the mortgage -- >> you can knowledimagine that house guys, if someone said we're going to have the obama tax rates go into effect, 39.6, all these things that are happening, and if you had, you know, the president say let me do this now and we'll talk to you later, would you -- if you were a house republican, would you sit there and say, okay, go ahead and do that, and then -- i mean that's thank you, sir, may i have another? they'll never get back down. >> but you know, i actually don't agree with that. i really believe that if, you know, if they can get that revenue base he gets by raising rates now, that you could actually do something like that we recommended, you know, depending on what politically bract cal to get done, what we can actually eliminate. but you can eliminate a lot of

these tax expenditures, broaden the base, simplify the code and bring down ritts. >> who in the base would go for that? that would be -- have you heard anyone in the president's base that would go for that? >> yeah, they would. not to say it's not difficult, it's not hard. we proved that people like dick durbin would move forward. >> i know. that's great. i know. durbin has risen above. he's risen above. >> he really has. >> yeah. >> we thank you very much. >> thank you for having me. i enjoyed it. >> we appreciate your helping us navigate what is an incredibly difficult thing for us to understand but you make it seem very, very easy. thank you, erskine. >> okay. good. stay at it. let's rise above. >> thanks. >> using 23 from now. >> that's zeroing out everything. earned income credit, the -- >> i'm going to stay 23, and i'm going to have a sound bite. you have questions, or comments, about -- kayla, you're back? >> she's talking twinkies. >> oh, my god. she's like, wow.

kayla's talking twinkies now. anything you see on "squawk" tweet us @squawk cnbc is our handle. still to come this morning, twinkies could be one step closer to finding a buyer today. the same could be true for devil dogs, ding dongs, funny bones. orange flavored cup cakes. some of your other favorite snack cakes. >> snow balls. plus yes, there's even an app for that. for that. the vatican is releasing the pope app. >> oh, my gosh. he's just on twitter, too. >> he did. it's available free from the apple store and offers alerts of pending homilies and video footage from web cams around the holy see. >> really getting hits. >> the app is part of the vatican's attempt to embrace new media, along with a twitter account, a youtube handle and a website. [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered,

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today marks a key deadline in the hostess bankruptcy kag ga. cnbc's kayla tausche joins us now. will we be able to buy twinkies forever? do you know that yet? >> you actually can today is the deadline to submit your interests. so i'll send you the -- >> they're not going away. someone's going to buy them. >> right. >> that is the hope at this point. based on the level of interest, it's hard to see how that wouldn't happen. i'm told 160 parties have been in touch with hostess over potential bids for separate

brands that a full-blown going out of business sale is being run to sell literally everything but the kitchen sink at hostess. even extra inventory of flour and chocolate. that's up for grabs, too, if you want that. today is the ked line to submit initial bids. while everyone focuses on twinkie, it's interesting, one of the biggest priority is selling the bread brands, wonder bred and merita. wonder bread's revenue is $500 million. it represents a bulk of overall hostess sales. in total the brands bring in about $2. billion a year. since the plants have been idle, there are no longer concerns. in a court hearing, advisers thought the sale may fetch about 50% of revenue so roughly $1 billion. sources say for all the interested parties they only expect about two dozen real bids to emerge. those are expected to be cabled by power house snack food

companies. also interest has been said to be strong from regional bakeries like chicago's alpha bakering, and walmart and kroger could bid. and financial sponsors. the difference between 150 interested parties and 12 or 24 real bids is evidenced by something like this letter. you could zoom in on this really quickly. this is from a guy named don sheridan in wellesley, massachusetts. he wrote this letter in cursive and submitted it with the court last week to buy all of hostess. there's hope, joe. >> thank you. when we come back, barron's top ten stop picks for 2013. and then run kevin mccarthy. we'll ask if he's ready to accept the call to rise above. impact life expectancy in the u.s., real estate in hong kong, and the optics industry in germany? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds

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welcome back to "squawk box," everyone in our headlines this morning, mcdonald's set to report november sales figures in less than 30 minutes. analysts are looking for global same store sales to drop by 0.1% from a year ago.

but last month we got disappointing results and that's why wall street will be watching this number very closely. today also marks the busiest day of the year for fedex as it processes an estimated 200 packages a second. if those expectations are met, it would be the busiest day in fedex history. and new york mayor michael bloomberg is reportedly weighing a bid for the "financial times" group, that's according to "the new york times." analysts have been speculating that owner pearson plc will put the f.t. up for sale. >> the news is out on ingersoll. >> oh, on the ingersoll? >> on the ingersoll deal. we thought we'd be hearing about that this morning, after we saw it over the weekend. and we said kayla reporting on it quite a bit this morning. enhance shareholder value and company value through two major initiatives, tax-free spinoff of the security business. and $2 billion share repurchase. looks like all the details are basically what we've heard but it is currently confirmed by the company.

bar ron's named its top ten picks for 2013. if you want to know if you should pay any attention to it the magazine's ten stocks for 2012 have outpaced the market by 4 percentage points gaining an average of 17%. now to the picks for 2013. there you go. apple, jpmorgan, royal dutch shell, barnes & noble. blackrock, general dynamics. marathon, novartis, viacom and western digital. might want to flip that so you people can see what i just said. marathon, novartis, royal dutch, viacom and western digital. five on each page. the fiscal cliff dominated the sunday talk shows. senator dick durbin on "meet the press" yesterday saying no deal on the debt without a tax hike on the wealthy. >> i can tell you i don't want to do it, the president doesn't want to do it but we need to solve the problem. we cannot allow their reckless position to drive this economy into another recession.

>> and senator bob corker argues it might be better to agree with what the president wants to do now on taxes, and then fight later on spending. >> if we were to pass, for instance, raising the top two rates and that's it, all of a sudden we do have the leverage of the debt ceiling and we haven't given that up. >> joining us now house majority whip kevin mccarthy. not everybody, i don't know, depends on where you're sitting i guess, congressman, "the wall street journal" says republicans shouldn't be negotiating with themselves. they ought to be talking to spoorker boehner. is it helpful? >> is it helpful what the others are saying? look, is raising the rates going to solve the problem? the answer is no. the best way to look is we're two months into this new fiscal year and if you look at the numbers that come back, we're already $292 billion in a deficit for the year. now, there are some good news

inside those numbers. do you realize that revenues have increased by 10%? that's $30 billion. that's $1 billion less than you get if you raise the rates in the first year. you only get $31 billion. but you know what the sad news is? spending has increased by 16% $87 some billion dollars. the problem is spending when you look at this. and for those who want to just give the president more money to continue the spending, i think that's wrong. that's not rising before. we've got to solve this overall problem. that's why right after the election, we proposed a plan to the president, we took three weeks to respond back to it. i've been frustrated with this administration. every action i've seen from them, they just want a slow walk us off the cliff because they think they'll blame the republicans. we've been willing to negotiate and we've been putting our plans out. but i agree, you cannot negotiate with yourself. because nothing comes to the end. >> do you -- have you spoken to speaker boehner since he had his meeting with the president yesterday? >> i'm going to talk to him a

little later today. i knew he was having the meeting. i know there wasn't staff in the room so we'll see how that meeting went. but that's the first. >> you have no idea? you haven't heard anything from anyone about what was discussed, or what the tone was? >> i've heard some things, but -- >> can you tell me? >> oh, can i tell you, sure? i wasn't in the room. >> we've just had a lot of people proposing, and i'm just wondering, i asked erskine bowles whether he thought the house would go along with it, give the president all of the tax increases he wants, and then we'll be in a position to talk about cutting spending later. is there any way that tea party house guys are going to go for that? and what does that mean if they don't go for it? how are we ever going to get a deal? >> isn't that how we got in this mess in the first place? we're always going to talk about the tough stuff, the spending cuts later? we spend too much now. that is our challenge. when you really look at the numbers and people argue why don't you go back to the clinton

time? the real core of what clinton had was they cut spending. their percentage of spending to gdp was so much less, and that's where they got out of it. that agreement in '97 cut taxes and cut spending, which spurred growth. and we need a pro-growth economy. that's how we're going to get out of this mess. what we're talking about today, of just raising the taxes, does not solve the problem. i don't see it passing the house. now, republicans have not sat back. we've put revenue on the table. but the president has always said it has to be a balanced approach. >> if you can choose, if you could choose, what's -- i mean we've heard -- we've heard from their side, from the other side, and i'm talking about from your viewpoint, secretary geithner. >> yes. >> has said, we -- if we don't get the 2% -- if we don't get the rise on rates on the 2% we'll go over the fiscal cliff. in your view would it be better to go over the fiscal cliff than to get the back to the clinton rates on the high end? >> i think the best thing we don't go over the fiscal cliff.

>> you do? you'd rather do some kind of deal? >> yes, i'd rather -- that's why we proposed from right after the election. everything we've heard from the other side has been silent until yesterday -- >> like we said, no way, unless we go to 39.6 on the top 2%. would you vote no to that and go over the cliff? >> look, he's not -- i'm not going to negotiate right here on the tv. i'd rather sit and negotiate with them. but the one thing i will tell you, what they're asking for is revenue. republicans have put revenue on the table. the president's own words a year ago in 2011 said he could get $1.2 without raising any taxes. and think for a moment, if you close loopholes you get a fairer process. for those who don't have lobbyists, or high-priced attorneys or accountants, they get a very fair system. and no longer are we making an investment based upon what the irs code is, it's based upon what the economics should be. that is a fairer system for all americans. it, to me, is more efficient.

that's a better place to go. it gets you what you're asking when you say taxes because you're saying revenues from a standpoint in a more efficient manner. most all economists agree. it does less destruction to the economy. but the most important thing for anybody to look at, we spend so much time on revenue, is what is the spending? just like the first two months. revenue's gone up 10% with us doing nothing. spending has gone up 16%. >> all right. one thing that i knew that $800 billion number, i knew that sounded familiar. i wouldn't really quite place it. so that's ten years of raising the rates on the high end, but we got -- we spent that with one little stimulus plan, didn't we? just boom. wasn't that $800 billion. that's ten years of the high end and we spent that in the first year of his administration like it was -- i mean that was gone before -- i mean i wish we had that back then we wouldn't need this $800 billion. >> exactly. and look at this. the president's proposal, we get $31 billion from the high end this year but he proposes a $50

billion new stimulus package next year, as well. he will spend more. he's asking for more taxes to spend more. that will get us in a worse situation. the best thing to do is end the uncertainty, do what republicans said, we'd extend all the rates, there is more money than in cash on hand than at any time in 50 years in america. we end that uncertainty we'd have the biggest stimulus with his own money from government. >> congressmen there are already people in your own party breaking ranks, including bob corker saying let's give in. if you have to give on one to get the other, would you agree to that? >> yeah, but what i'm hearing corker say, he's just going to give on one and hope for the other some other day. i think, in a real negotiation, you get a standpoint where the president says he wants to balance the budget. >> but would you give on one if you could get on the other for that? >> well, corker's not getting the others. i think -- >> no, but would you?

if you could -- >> i would give this president revenue. not a tax increase, revenue. >> what if he needs a trillion dollars like we just heard from erskine bowles. he wants a trill you put 800. >> you don't know that until he would get in a room and negotiate. i'm more than willing to sit down and negotiate with him. but i'm going to find one that solves the problem to be able to rise above just as you say, but i want to solve the problem. i don't want to be back here next year or ten years from now getting the same question. i think this country is better than that. let's do what is right, now. and let's not play political games. let's not do this by polling. because that's what got us in the place. let's stick to our principles and solve the problem. >> you're out in california. you're at ground zero from what can happen. >> okay, look at california. i ask you this question. should any american pay more than half of their income to government? so you go to 39%. right? add obama care. then add 13.8 in california. and you're a small business, running as an "s" corporation,

should you really pay higher than 50% of income into government? that's before any sales tax. that's before paying the cable tax to watch this show. that's before paying the water tax when you take a shower. think about that. and people want to just give more? and hope spending cuts will come at some later today? >> congressman, we hear you. we appreciate it. and thanks for appearing this morning. >> thanks for having mean >> okay. >> when we come back, the headline number on friday's jobs report shows better than expected payroll gains. but there were sceigns of weakns in the participation rate and downward provisions to earlier reports. steve liesman joins us next with more on how economists are reacting to those numbers. tomorrow, "squawk box" is kicking off a special day of fiscal cliff coverage. rise above: mission critical. becky quick and jim cramer, live in washington. 33 special guests, grover norquist, congressman jim hencer link, senators from both sides of the aisle, corker, warner,

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futures are now down where they were earlier. making headlines, president obama's inauguration committee is accepting corporate donations to help fund the parade and other events associated with the ceremony, which will take place on january 21st of next year. the move is a shift for obama, who didn't accept corporate donations for his first inauguration in 2009. the change comes after tapped-out democratic donors spent huge sums helping him get re-elected. and general motors wants to draw more buyers into its show room so the automaker is doubling cash incentives and sweetening lease terms on some vehicles, including the malibu, the cruz, and the silverado. also gmc pickup trucks. the goal to reduce inventory of unsold cars and pickups. if you want to head home for the holidays you better book soon. the website fare compare warns you should expect to add $10 a day to airfare booked after the second week of december. and prices are forecast to rise sharply on the 19th.

the cheapest days to fly, christmas, and new year's day. hmm. most expensive are the sundays before those holidays. those payroll numbers for november came in stronger than expected. joining us right now with more on how economists are viewing friday's jobs report, especially when it comes to the upcoming fed meeting this week is our senior economics reporter steve liesman. steve, good morning. >> good morning, becky. thanks. the stronger than expected jobs were not making believers of many economists. they continue to expect weak fourth quarter growth after that number came in at 146,000 with an expectation of around 85,000. fourth quarter growth estimates range from a low of below a half a point, 0.4%. that coming from morgan stanley. the high from what i could gather this morning, 1.5% at jpmorgan. remember that third quarter growth was 2.7 pfrs. a lot of this, though, is going to be inventories. suggesting the growth back drop a little bit stronger than what the number might imply. but the declining unemployment rate fell 0.2 to 7.7%

complicates the job for the fed which is expected to place operation twist, where it sells short-term securities and buys long-term ones, with just outright asset purchases on the long end. here's the fed forecast for the fourth quarter. notice the actual there, at 7.7%. it's now at -- the forecast for the end of this year,.1%. it's now averaging you can see there on the left 7.8% and it's just above the level forecast for 2013 already. the quality for the fed is how much of the decline to believe. jobs have been growing. that's the blue line. and unemployment rate falling. but the participation rate, that's the green line, that's the percentage of americans counting themselves as part of the workforce, that's been on decline. in part due to aging in the upon lags, but also because of the back drop of the economy with americans being discouraged if they'll ever find jobs. another factor this month, economists think people might have counted themselves out because of the hurricane. still, jim o'sullivan finds the

unemployment rate for real, at least the decline, and says the fed is going to have a tough time holding the line on the pledge to keep rates low through mid 2015. let's see if we have that quote? the likelihood that officials will be able to or will need to keep the funds rate near zero for almost three more years has declined significantly. we're going to have the official market forecast tomorrow in the cnbc fed survey. i didn't look at it. because, i was afraid, joe and becky were going to quiz me on it and i'd have to give it away. we'll get a new round of fed forecasts from the fed along with monetary policy statement wednesday. the trouble with the unemployment rate underscores why, by the way, is the fed is having such a hard time figuring out whether to use economic rolls like the unemployment rate -- >> i'm going to have a big conference with you. >> on what? >> on what you just said. i read a journal editorial over the weekend and i want you to explain this to me. in light of phil lebeau's report -- >> people not finding jobs. >> yeah. because they're looking for people to work for $16 an hour

and a lot of people are choosing not to. $16 an hour because they can make -- >> you sent me a good piece on that. >> right. the "journal's" point was, okay, we have a participation rate when the recession ended it was 65.7. we've been adding jobs ever since, it's gone from 65.7 to 63.6. that, unless you really assign a lot to baby boomers retiring that doesn't -- it's illogical that as jobs are being added -- the jrnlg points out if you add up food stamps, unemployment insurance, and you've seen the studies that even romer and others did about extending -- >> alan krueger. >> about extending unemployment and how that is detrimental to the jobless rate, if you add food stamps, which are way out -- you add unemployment insurance and disability which has skyrocketed, disability payments and then you take, you got a job offering you $16 an hour, and you got this social safety net paying you $30,000 a year, if you decide to work you got to drive to work. that costs you money.

you got to get child care. you got all these other things you got to do to leave the house. i'd be discouraged, too, i would stay home for $30,000 a year in government subsidies rather than go work running on, sweating, running some manufacturing facility. i'd rather stay at home and that's a problem. >> is that true? >> as far as i know the economic research that i've seen suggests that the unemployment rate may be a half -- a quarter to a full point higher on the other end, because of jobless claims. that's the first thing i see. the second thing is, joe, i don't think everybody gets $30,000. and the piece you sent, which i thought was really interesting, was this idea that it allows you, at least for awhile, to try to find a similar job. if you're a guy who made $30 an hour, that you can at least not take the first job that comes along at $15 an hour. >> how long is that? >> they keep extending it? i think it's been out for as long as two years now. >> do you believe -- >> i'm very surprised by that. watching these numbers for a long time.

>> they go -- >> no one even is applying for the job. >> for some of those jobs. >> so here's the question, joe. if net-net you make more or at least you are -- you can get by on the sub sid dwi, and you can keep looking for work at your current or around the current thing, you should try it for awhile. now, i'm in favor of the safety net being out there for awhile. but you generally have to draw it away. >> with unemployment insurance now -- >> what alan krueger's work showed is that as you near the end of your term of unemployment insurance, your job search increases. >> because you get more frantic. >> you get a little more frantic and you're more likely -- joe, people's standard of living and their wages are sticky. and when you mack that point, which i very much appreciate, ask yourself the question, your own willingness to go to work for less than you make right now. >> but i think it's an interesting point because they're also talking about -- >> you don't have a choice. >> the jobless benefits right

now. >> the big -- you know it goes back to american enterprise, earn success, doesn't even matter how much money you make, if you're earning your success -- learn helplessness where you're -- remember the person from africa who said thank god we're not giving aid to africa anymore so we can do this ourselves? >> when we make moral choices to give people unemployment it may not be the most economic choices. you don't want to be something that is insent viced. >> look at all the eurobors. >> we don't have trhat system. >> that's supposedly something like libor. >> i don't want to -- >> i'm not boring european people. eurobor. coming up. so, this board gives me rates for

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that works. if you request, they play. let's look at some stocks to watch. ingersoll has announced what we've been talking about with kayla over the weekend. spin off of the security technology business. the unit is the smallest of the business segments but it announced a $2 billion share buyback and a 31% dividend increase. information management solutions provider, intermeck is being

bought by honeywell. about a 25% premium. apple, jefferies -- jefferies cutting its price target to 800 from 900. so, you know, i don't know if you can use that in your analysis of what to do with it but jefferies no longer thinks that it should be 900. now looking at 800. i don't know, i guess finally figured out what the quote was and hid it into his machine and said wait a minute, 900? let's go to 800. and expedia is among the latest batch of companies to declare a special dividend in advance of the end of the year. also, "washington post" accelerating all its 2013 dividends. big supporter of the president, but not above paying their dividends to avoid the taxes. when we come back, the path to fiscal compromise. south dakota senator boone thune is making his way to the "squawk" set. also the ceo of starwood hotels on the impact to his business if we actually go off the viscal

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house speaker boehner meeting with president obama at the white house. but what will it take to get a compromise deal? republican senator john thune will be our guest host for the hour. >> plus starwood hotel ceo frits van paaschen on the effects of the fiscal cliff and avoiding the european recovery model. >> we know big ben. >> parliament. >> the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc. first in business worldwide i'm joe kernen along with becky quick. andrew ross sorkin is off today. we have a big lineup this hour. sitting in andrew's seat our guest host, senator john thune. he is with us for the hour to talk about the fiscal cliff. talk about jobs. and a lot more. we're also going to speak to the president of telemundo media. emilio row mano. we're going to convene an economic summit to tackle

america's debt crisis and outline growth scenarios for 2013. in addition to solving our budget problems and the fiscal cliff, we're also going to figure out how it affects the hotel industry with starwood's hotel ceo frits van paaschen who will join us on set. first, though, is that mcdonald's? >> yeah, mcdonald's blew expectations out of the water. this is the opposite 6 the report that we got last time. >> the exact opposite? >> yeah, the exact opposite. they beat on every level. in their global comps, they came up 2.4%. street was looking for down 0.1%. >> what? >> in the u.s. they were up 2.5% versus the down 0.8% that the street was expecting. in europe they were up by 1.4%. street was looking for up by 0.1%. and in asia pacific, middle east and africa they were up by 0.6% versus the drop of 0.4%. now, digging through this release very quickly, there's a weird language that they have in here. they talk about how the number of week days and weekend days

can impact reported comp store sales. in november of 2012, they say that the calendar shift adjusted consisted of one less tuesday and wednesday and one more thursday and friday. i wonder if they sell a lot more mcdonald's on fridays. i remember we used to go there as kids because you could get the fish fry on fridays. >> and analysts can't figure that out. >> i don't know how we're off by this much if it's not that. >> did our guy don -- his name's don? >> he said it's a destination for more than 69 million customers every day because we offer great-tasting, high quality food. >> all true. >> now here's the important part about what he says. remember last time he said they had too many things on the dollar menu and they were going to shift some of those things. he said we are strengthening our focus on the global priorities that are most impact 68 to our customers, optimizing our menu and broadening accessibility to our brands and business, whatever that means. i think what it means is they've been moving more things off the dollar menu to get people to come in and get a few things on

the dollar menu, a few on the regular bryce. maybe that's helped them out. but this is a huge shift from where we were just a month ago. >> it is. >> amazing. >> so again that dow component is indicated higher on that news. we thought it was up by about 2%. in europe, shares have been lower in early trade this morning. some of the reasons for this are political uncertainty. in italy you had the prime minister mario monti announcing that he's going to be stepping down after his country's 2013 budget is approved. and before the end of his term. that decision comes after the party of former foreign minister silvio berlusconi withdrew its support for monti's government last week. berlusconi has indicated he will run for leadership again. the major european averages at this hour, you can see some red arrows still but some moderate declines. particularly the ftse which is only down by about a tenth of a percent. in france the cac is down 0.3%. and in germany the dax is down 4.5 tenths of a percent. u.s. equities have been dow. a little improvement on the dow

futures because of mcdonald's. s&p futures off by 3.5 and the nasdaq down by just over seven points. overseas in asia you did see some green arrows. part of this was because of news on sunday which shows positive news with some of the numbers they've been watching in the chinese economy. the shanghai composite ended up by about 1%. in korea, kospi up by 1.5%. also ingersoll-rand is spending off its security technology business and announcing a $2 billion share buyback program and a 31% hike for the dividends. our kayla tausche first reported that story this week. the deal comes after activist investor nelson peltz to try to break up the company. some significant moves. the stock is up by about 1.8%. president obama and speaker boehner meeting at the white house yesterday to talk about the fiscal cliff. neither commenting about the meeting. earlier this morning we spoke to erskine bowles, who is co-chairman of the president's deficit commission. here's what he had to say about the progress of the fiscal cliff negotiation. >> i think the atmospherics are getting so much better.

we've kind of gotten out of the kabuki theater and we've gone to, you know, dancing the tango with, you know, those two guys. and any time you start to tango, you got a chance. 40% chance we'll actually get it done before the end of the year. probably a 25% chance we'll get it done right after the end of the year. and then there's that horrible 35% chance that we'll still go over the cliff and have pure chaos. but i think the chances of getting it done now are better. and i think that's what's key. >> have indicated a willingness to compromise. what's interesting there is he did say 40%, that's a little better, that the odds are we get something solved and don't go over the cliff. but he's still looking at a 1 in 3 shot that we end up going off the cliff. so it's that part in the middle that's kind of evened out a little bit. >> let's get to our guest host for more on the fiscal cliff negotiations. joining us now for the rest of the show, senator john thune, chairman of the senate republican kovrns conference. a member of the budget, commerce and finance committees and the

third ranking republican in the senate. and, tall, great suit. you're like 6'2", aren't you? 6'1"? >> actually more like 6'4". you're sitting down. >> i'm sitting down. didn't want to give you credit for those extra -- anyway. you cut -- i like the cut of this man's jib. anyway, senator, you have made the point that the debt ceiling is another place where the gop might have some leverage. you heard senator corker. does that speak to you? does that make sense to you to give on the 2%, and then use the debt ceiling to really extract some entitlement cuts? >> ideally, joe, i think what we'd like to see is a deal right now that includes a restructuring entitlement programs. that's what drives federal spending. we can't solve this on the revenue side. and, you know, we've got colleagues right now that are san diegoing out, making some comments about various positions. the bottom line is they all agree on one thing, that is that in order to get the country's

fiscal trajectory back on track, to achieve some sort of fiscal solvency for the future it's got to involve dealing with entitlement programs, and so far that's been the thing that the president has been unwilling to come -- >> you think he would, if he did gave him what he wanted now, do you think he would be willing to do that in good faith after the first of the year? >> well, i would like to think that. but so far, at least, all we've seen is this rhetoric about taxes. he's even gone double where he was during the campaign. he said $800 billion in revenues. now he's talking about $1.6 trillion in tax increases. the president seems to have an obsession the raises taxes. anybody who studies this knows full well that that doesn't solve the problem. even the $800 billion, which would include income tax rate increases on marginal income tax, as well as capital gains and dividends, gets you $800 billion which funds the government for about a week. >> do you believe, you believe secretary geithner when he said that if they don't get 39.6 on

the top 2% that they'll go over the cliff? do you believe that? >> well, you know, i think that -- i 40e7 that's all bluffing. it would be a big mistake in our view to go over the cliff. you look at what all the economists are saying -- >> didn't sound like a bluff. >> i saw the interview with steve where he said absolutely we're willing to do it. you don't hear republicans talking liberally about going over the cliff. >> if your choice is to raise the -- to go back to the clinton rates on the top 2%, either do that or go over the cliff, would you go over the cliff or would you do that? >> well, i think it happens either way. i would prefer not going over the cliff. i think that's a big mistake. if you look at what that means -- >> so you say, okay, then you'd vote for something that would -- >> i would vote for something that would address the issue and solve the problem. which really is, we've got restructure entitlement programs. which is why it's so important that the president come to the table with a plan. republicans are at the table saying we're putting revenues on the table, which is a hard place

to go for most republicans. but the president hasn't met us there with what he knows and what we know ultimately has to be fixed. >> you get to $1.2 trillion in revenues if it meant you got the spending cuts you were after right >> that's going to be a really hard sell. i think that the $800 billion number is something that the house republicans, the leadership, put forward last week, as you know. that represents, i think, for most republicans, something that is sort of a high parameter. and that's assuming, again, that you aren't raising rates, that you're doing it through some sort of limitation on deductions. >> that's a killer point for you, though? it sounds like the president's bottom line is we are raising rates, at least on the wealthiest americans. that your line in the sand, as well? >> i think our line in the sand is, a deal that fixes the problem. and so most republicans are going to be very reluctant -- but the reason republicans don't believe rate increases is the way to do this is because that's what gets hardest to small businesses. the joint committee on taxation says it's going to be a million small businesses who employ 25% of the workforce that get hit by

this rate increase. and if you're talking about jobs and the economy, which is what the president said in his post-election news conference he wanted to be his number one priority, the opposite thing to do would be to raise taxes on the people who create jobs. we just fuddly believe this is about spending. it's not about taxes. the president obviously believes it's about taxes and these rate increases are really important to him for some reason. but we think there's a way you can get revenue into the equation, but do it, but you got to have -- you've got to have something. >> the president has a bigger bully pulpit. he has already laid out what he wants to do, and polls seem to indicate that most americans are okay raising rates on only those who make $250,000 or $500,000 or more. because it's not going to affect most of them. he has managed to lay this out as something where, if the republicans don't go along with his plan, they will be responsible for raising taxes on all americans when we go over the fiscal cliff. how do you avoid -- >> i think that that's one of the reasons that the president

and his people like to unite. congressional democrats are saying we'll go over the cliff. they get the policy they want, which is higher taxes, moren inny to spend, defense cuts and they think that the political plan gets put on the republicans. >> check mate. what do you do? >> if you ask the question differently, people say yeah we want to raise taxes on rich people. if you pose it as do we want to raise taxes on small businesses or raise taxes on -- or do something on deductions, people would much rather do something on deductions than raise rates on small businesses. >> again he has a bigger bully pulpit so he gets to decide how this really gets played out for a large part in the american public. how do you counter that? >> i think he's got the bully pulpit and their rhetoric that it's concerning in my view that they're talking about going over the fiscal cliff. but the president right now, that's where the line he's drawn in the sand, we hope that at least is going to draw a line in the sand, that he'll come with capital and i'm glad to hear discussions with speaker boehner and talk about a balanced plan,

which he's always said he wants. but to have a balanced plan you've got to have these entitlement programs -- >> but what's the balance? is it one in one to cuts? one in three? >> the president himself kourg the election said 2 1/2 to one. now his proposal last week has $1.6 trillion in tax increases, $400 billion in spending cuts and another $200 billion in spending, plus an unlimited ability to borrow and raise the debt limit >> you'd be okay with 2 1/2 to 1? >> the bowles-simpson was about 3 to 1. frankly i don't think it's a revenue problem. i don't want to go over revenues. but you know, if we could get a deal that would put the country on a sound fiscal footing and change this trajectory that we're on, there perhaps could be some republican support for it. i'm not sure where i would come in. >> the -- part of the cliff that bothers you the most is that you'd like to do something with the sequester? or, if we were to sunset all the bush tax cuts?

that would -- >> that would go -- republicans want to get rid of the deficit. that almost cures the deficit. and that was the rates that we had at one point. and they were supposed to sunset. and i guess there's never a good time. but what if they all sunsetted and you didn't do the sequester? >> well, if you didn't do the sequester. you're talking about allowing the rates to go up on everybody. >> on everybody. >> then you're talking $800 billion. that's a ten-year number. so you're talking about $68 billion next year that it increases the revenue in the out years. but $68 billion is -- >> not that much money. >> relative compared to the deficit. >> well, exactly, so it really doesn't do anything, and when people realize, okay, give the president everything he wants. give the rate increases. the fact that you're giving the rate increases on just the top two rates which is what he said he really wants that's $442 billion over ten, or about $40 billion a year. that doesn't fund the government for half a week. this is not the problem. the problem is we have gotten spending to where it's completely out of chak and we've got to start doing something about deleveraging the amount of

debt -- >> but it is part of the object where you expect people to give up on spending, people give up on entitlements and give up on the other end. >> i think that we are where we are, the president won an election. we acknowledge that. we recognize that. that's why republicans, i think, are talking, in a way that probably a lot of republicans are uncomfortable with. we're outside the comfort zone when we start talking about revenues. there's one good thing about the fiscal cliff, it's increasing big mac sales. >> yeah. >> senator is going to be with us for the rest of the hour. if you have any questions, send them in to us at squawk @cnbc. the president of telemundo is ringing the opening bell at the nasdaq today. we'll sound off on "squawk box" first. emilio romano will join us when "squawk box" comes right back. still ahead this hour the impact of the fiscal cliff on the hotel business. starwood hotels ceo frits van paaschen on the company's preparations for the end of the year. twins. i didn't see them coming.

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welcome back to "squawk box," everyone. the futures are dawn, but not by a whole lot. those dow futures at this point only down by about 9 points

because of mcdonalds and the news that we saw out of them beating expectations with their same store sales for the month of november. also european union leaders gathering in oslo, norway, this morning to receive the nobel peace prize. the nobel committee is awarding the prize to the european union for fostering peace on a continent ravaged by war. spanish language media company telemundo is celebrating its 25th anniversary this year. the company is ringing the bell at the nasdaq this morning. joining us right now acceptle yae romano. he is president of telemundo media which is owned by our parent cop comcast. emilio, thank you for joining us this morning. >> pleasure. >> part of the things that you're doing this morning is unveiling a new logo. getting away from the "t" but also a celebration of the growth of the company. >> that's exactly right. we're reflecting what our viewers have said to us about the duality of being hispanic and being in the u.s. so our new bold and very good brand that shows the duality that they live here in the u.s. is going to be the new way we're

going to present telemundo. we're doing that having the best year ever. our ratings have been the highest ever from 11 to 12 and year-end and we are experiencing growth. our sales were over 20% year-to-date with our best offer ever as well. we're very excited in the future of the company. it's really looking very compromising. >> when you look at hispanics in america, the growing part of the population, i'm guessing that helps with your viewishship, as well? >> yes, having hispanic being the second largest market of spanish, largest market of spanish next to us makes it a huge growth opportunity. we're expecting the hispanic market to be $1.7 billion in purchasing power in 2017. that's a very exciting market to be in. >> one of the things that's always impressed me about telemundo is it has not just looked at people in this country, hispanics speaking spanish but also tried to wrap in people who maybe don't speak spanish as fluently as their parents do or others.

you have closed captions in english. how wbig of a draw has that bee to the network? >> it's very interesting. we've been doing that for almost eight years and we get good ratings. about 4% of our viewership we have documented that they see it through closed caption. and the most important of it is that we have the most compelling content in spanish. we have the largest hayispanicsn air because we're the largest producer of prime-time spanish content in the u.s. our content is sold in more than 50 languages. resonating not only closed caption in the u.s. but around the globe. >> i know some of the big draws have been the novellas that you run at night, the original content that you have. the news is a big zeal. now you've got big deals coming in with sports. the world cup coming up in 2015? >> that's absolutely right. thanks to support of comcast and nbc universal telemundo is the home of the largest, most important sports media asset which is the world cup.

the fifa world cup starting 2015. and with that and the help of our parent as well, viewers saying, being partners with nbc news, the largest franchise of news in the world, we also have grown quite a bit in news delivery, and we can see that this is just the beginning of a very good trend. >> okay. emilio, we want to thank you for joining us today, and congratulate you on ringing the bell. we'll be watching later this morning. >> thank you so much for having me. zblemle yo romano. >> in spanish terms, you remember my spanish? >> no, but i remember mine. my spanish teacher used to yell at us. [ speaking spanish ] it means shut up, you have nothing in your head. >> mine is -- [ speaking spanish ] welcome to the parking lot. anyway, coming up, much more from our guest host, senator john thune, and planning for 2013, what you need to know about jobs and economic growth in the new year. then starwood's hotel ceo frits

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ask your doctor about cialis for daily use and a 30-tablet free trial. welcome back to "squawk box," everyone. we told you earlier today about the cheapest days to travel during the holiday season. but that might be a relative term. you may find it difficult to avoid higher fares regardless of

when you travel. according to travelocity the average domestic round trip airfare this holiday season is coming in at $414, including tax. that's up nearly 9% compared to a year ago. also, a new proposal for international regulation of the internet drawing worries about the spread of online censorship. a group of arab states putting forward a plan late friday that would require countries around the world to explicitly regulate internet companies. this proposal also won the backing of russia and china at a conference in dubai. the pitch for direct regulation came as an unwelcome surprise to delegations from the united states and other countries that have supported the current system of regulation for the internet. when we come back, the near-term economic impact of america's debt crisis, we'll convene our "squawk" economic panel. nathan sheets and ian shepherdson on growth in 2013. right now, take a look at the equity futures. down by about 13 points. the s&p futures down by 3 points.

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welcome back to "squawk box," everyone. let's get a look at some of the stocks on the move in this morning's trading. wait until you hear this conversation around the table. dow component mcdonald's says

same store sales were up by 2.4%. that's huge because analysts had only been looking at sales that would drop by 0.1% so this was a big reversal on what we heard a month ago and a big surprise to the street. you can see that with stock movement right now. that stock is up 2.25% to 90.50. we'll hear more about mcdonald's during the day. ingersoll-rand is spinning off its security technology division. kayla tausche reported this story over the weekend. it came in official an hour or so ago. ingersoll also announcing a $2 billion stock buyback program and a 30% increase for the dividends. honeywell is buying intermec for $10 a share, a 25% premium about above friday's close. also nearly 50% above the november 1st close. that was the date that intermec announced it was obtaining bank of america merrill lynch. yes, everybody we're up for sale. >> let's get back to the economic impact of the fiscal

cliff and growth prospects for 2013. joining us on set is nathan sheets, he is citigroup global head of international economics. he's also a former fed director of international finance and ian shepherdson, chief economist from pantheon economics, and our senior economics reporter, steve liesman rejoins us again. and we did, we were interrupted our conversation by this tv show, which always seems to do that. we were having like a great conversation and boom, the cameras are on. but ian, the latest thing i asked you about next year's growth. you said 2%. then year after that, 3% to 3.5%. then we got to basically to say we shouldn't be doing any tightening of any kind right now, fiscally, no tax increases, no government spending, we don't need to right now. >> let it all rise. >> the economy, in your view -- >> can i say what you said? >> euro friend? >> i'm in favor of trying euro trend. >> that's fine. >> misery loves company.

we can have it all forever, like greece. >> we're not greece. and that's the whole point. neither is britain which is pretending its greece, and look where it's getting them. britain's not growing at all. >> would you do some stimulus? >> i probably would, yeah. >> what kind? >> there's a ton of infrastructure that needs to be done in this country. >> then do it. and borrow money -- >> it's free. we can borrow money for free for 30 years in real terms. the market is not telling the u.s. to tighten fiscal policy. it's telling the u.s. to borrow some money. >> can you make sure we only do things -- we're not going to fill high speed rail lines between cities no one wants to travel to? >> if you spend a billion dollars i can't guarantee that every last cent of it is going to be spent properly. >> how moan solyndras will be in that balance? >> only two. >> you have to deal with the issues that krugman never deals with. i love the explanation we should spend spend spend. what happens when interest rates rise? two is you're talking about trillion dollar deficits as far as the eye can see. and three you're talking about

what is now $16 trillion in debt going to $17 trillion. how do you -- >> and the population growth. >> yeah. >> but tightening right now will just make it worse. the debt numbers are high. but it's coming down. the deficit's declined in the last three years and tax revenues are rising. spending has been flat for the last two and a half years so the pressure is moving in the right direction. the worry for me is if you raise taxes and cut spending now you're going to knock back growth and prevent that acceleration in revenue. you've got gdp growth up to 3 or 3.5, the revenue implications are enormous. because revenue tends to spike -- >> and nobody believes it. that's the problem. we're into this world where we may spend, and we may even have a pop from government spending. it's never sustained. and all it creates is this huge discussion which underminds business confidence of how we're going to pay for the debt. we have exposed, i think, the achilles heel of keynesian economics. >> i broadly agree with you.

in 2008, 2009, i think the fiscal stimulus made a lot of sense. but i think that we're at a point now where the economy is strong enough that we need to get started on the fiscal adjustment. we've got to make sure it's not too many. i'd say something on the order of fiscal drag next year on the order of 1% to 1.25% of gdp is the right way to go. but if we come out with another fiscal resolution package, that says we're doing nothing in 13, nothing in 14, nothing in '15, oh, but we're going to adjust like that in '17, '18 and '19 the markets are going to laugh at us. the credit ratings agencies are going to laugh at us. it's time for us to get serious on fiscal. >> that's the problem. all these guys making all these decisions. my producer, whose father is a real estate attorney, he's turning business away because everybody right now is selling their homes in anticipation of next year's rise in taxes. and so, you have to work around this. great idea. government taking the place of business when business is not

spending. but it creates unintended consequences. >> but unintended consequences, they're probably only a year or two out. if you put in changes that were actually permanent changes, instead of having this constant, okay, this is the plan for the next three months. this is the plan for the next six months -- >> the way it's being done is crazy. with this -- we lurch from one crisis to another. it's almost as bad an outcome as a fiscal tightening which i don't want. it's the uncertainty of what we night do. that's damaging confidence and you can see that in the surveys. clarity to be good but with less spending cuts and less tax increases would be better. >> senator, is there a way we get to that point where we're not living quarter to quarter or half a year to half a year? >> i'd be curious to know what is the impact in this quarter on gdp of all the uncertainty associated with the fiscal cliff? i mean what's it costing us? >> we're going to see a pretty grim fourth quarter. some of that is sandy. you can't disentangle it. i'm sure it would have been better if it weren't for the

uncertainty. we saw how bad it was in the summer of '11 and it will be the same now. >> i very much agree with ian on this point, that the uncertainty is associated with the fiscal cliff is at least a percentage point on the fourth quarter. and could be more than that. it's just a lurking weight on the business sector. and if we are going to get this growth, i think we've got to have a little bit more certainty on taxes, on regulation, and the trajectory of fiscal policy going forward. >> what i hear you both saying, though, and you're talking about spending issue, and not worrying so much about that, but i also hear you saying it would be a big mistake to raise taxes. >> absolutely. yeah. >> but the top 2%, is that the least deleterious people to raise it on? >> yeah, it would be. but right now i'd prefer not to raise taxes on anybody. but if you're going to do it, then the people at the lowest propensity to consume -- >> you don't buy that small businesses fall under that?

>> no, most small businesses don't earn anything like that. >> but the ones that employ more than half the workers are big small businesses that do pay those rates. >> well, i don't think it will make any difference to the higher end. there's no evidence to suggest that there would be a -- >> would you be somewhat corporate? how about cutting corporate tax rates? >> u.s. corporate tax rates are beginning to look uncompetitive. i have no problem with rearranging tax rates to make the system more efficient. the u.s. tax code is ludicrously complicated. >> don't you want us to be disadvantaged compared to great britain? i'm on to you. you're destroying us over here and trying -- >> i just hired five people in this country. >> the accent's got me real suspicious of you. >> the fed, wednesday, twist is coming up for expiration. they're selling short-term, buying long-term. twist ends. what's the expectation? what's the number? >> well, bottom line with bernanke, he's not trying to fool you.

the fed has been quiet as market expectations have coalesced around an extension of purchases on the order of $45 billion of treasuries. i think that is clearly where they're headed. and my personal view is they're going to be buying $45 billion of treasuries and $40 billion of mbs. >> $85 billion? >> a month until well into 2013. and it wouldn't surprise me if they were still buying by the end of next year. >> 7%, fed has forecast 8.1%. in fact it forecast 7.75% for 2013. >> yeah. >> so, the unemployment rate doing better than the fed had forecast. cos that change policy at all? >> i don't think so. you know, i think they look at the labor market, rather than that one number. that number is so distorted. the survey which it comes from is so wild, so volatile, they look at the broad picture. pay roll is 150 a month, that's not good enough. >> we should point out ian has a

new company. he used to be at another company. pantheon you just started. >> yeah. >> and just hired five americans. >> what was it high frequency? we can't even say that? >> i didn't want to -- >> doesn't even exist anymore? >> so it's not exnay on the -- >> no one's ever left here. >> they poof. when they leave cnbc, never to be seen. >> right. >> so this was your first -- you just got here? you've never had another job, pantheon started here? >> i just learned it. >> all right. >> gentlemen, thank you very much. >> thank you. >> when we come back, we'll have more on the surprising same-store sales numbers from mcdonald's. we're going to be talking to an analyst who covers the stock. also avoiding the european model and our solution to the fiscal cliff. frits van paaschen on how to strike a deal that won't lead to lackluster growth. [ male announcer ] you are a business pro.

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welcome back, everybody. how will the fiscal cliff impact the hotel industry? joining us right now is frits van paaschen. worldwide president and ceo of starwood hotels and resorts. frits is also a member of the fix the debt leadership council. >> great to be back. >> we know that the hotel industry, the tourism, the travel industry, seems to have been doing fairly well for awhile. how have things been holding up as you've been getting into the holiday? >> i'd like to say so far so

good. in other words we haven't seen a real effect yet around the uncertainty. but -- about the fiscal cliff. if we fall off the cliff, i think that could change pretty quickly. but right now it's steady as she goes. >> the front page of "the wall street journal" today lays out that consumers, there are some concerns around the edges. you start looking at consumers and friday's preliminary university of michigan consumer confidence showed a huge plunge. do you think that's because of the fiscal cliff? >> it could very well be that. i think that from a business perspective, uncertainty is very costly. and so the longer we go without understanding what's going on. the worst we get. if you look at europe, we've just been lurching from crisis to crisis. the level of uncertainty there has definitely pulled back economic activity. we do see the same thing here if we don't get a sustainable, clear, credible solution to america's fiscal problem. >> what does that mean? sustainable, clear, credible solution? >> well, i think what it means is, when you have to solve $4 trillion worth of spending everybody has to give somewhere. so there has to be some work on raising taxes, but most

importantly, making sure that entitlements don't run away in future years because people are going to look at projections looking out into the future. as i travel around the world, and visit sovereign wealth funds, they're looking at trillions of dollars and where to spend it, as they look at the u.s., what they want to see is a stable environment to put that money to work. if we can get that capital into the u.s. that will be a stimulus program by itself. >> frits, we pending on how you look at the numbers there are peel who say these two proposals aren't that far off. if you look at the numbers on each side and maybe try to find some common ground in the middle, maybe get to $1.2 trillion, where do you go on spending cuts is the big question because that seems to be a little easier. do you think this needs to be a three to one when it comes to revenue versus revenue increase or three to one when it comes to spending cuts versus revenue increases? do you see one to one, what would make you feel good looking around the globe and looking at

what -- >> i'm not a tax expert so i can't give you a precise ratio. what we need to do is see a program where, if you look at reasonable numbers, you could see that the debt-to-gdp ratio comes down over time. as we go from $16 trillion, as we cross that 100% mark, we start looking more and more like countries in europe. we've got to avoid that. the issue is, and the opportunity is, there's nowhere to put capital to work around the world as attractive as the u.s. so if we don't solve this, it's our own fault for not being able to bring that money here. >> is it attractive right now? have you been putting money to work over the last two quarters? >> i think if you look at the ten-year treasury it's clear the rest of the world is still coming to the u.s. to put their money. >> how do we know that's not the fed? >> how do we know that's not the fed? i think you have to look at where the investments are coming from. we talked to sovereign wealth funds -- >> they're still buying treasuries. >> right now the spread between yield and real estate versus

treasuries is as big as it's ever been. so, there's an opportunity here to put money to work. >> you think that, you know, we haven't even talked about regulation, obama care, any of that stuff, so fixated on the spending cuts that are coming and the tax increases. that's not going to be an issue for foreign investment? this is still the best place? we can get through all of these -- this regulatory environment, this increase so much and it's going to continue to -- >> look for all the regulatory challenges that we have, we still have the most transparency, the clearest rule of law, the most proven record of succession of power of anywhere in the world. >> yeah. >> so the confidence level can be there. in terms of being fixated on tax increases, i think senators have been very clear about that. the proposed tax increases are actually pretty small in the scope of the overall program that we're talking about. >> let me just, and i appreciate the work, frits, that you and others are doing. i've met with members of the fix the debt coalition and the advocacy that you're providing for a balanced plan.

but we've encouraged members of your coalition to do is to impress upon the white house the importance of acountriesing entitlements. the president's last proposal was four to one revenue increases to spending reductions. which is completely out of whack. isn't being taken seriously anywhere. and actually when it was voted on, which was pretty closely modeled to the budget last year, didn't get a single vote in the house or the senate, but my question is, on the tax issue, you've since the great recession got a pretty nice run-up in your stock. if you get to next year, and dividend and capital gains tax rates go up, does it become harder to finance in the equity markets? i mean are people going to start looking at this and saying, do we really want to be investing in stocks? >> you know, it's interesting. one of the most striking things for me in the last year was being in a room full of business leaders, and talking about the simpson-bowles program. and having are, to the person in the room, people say, they would endorse a program like that. >> do they know what's in it when they say that?

i always wonder. >> i think sufficiently. because what we're saying here in basic terms is, federal spending today is 24% of gdp. collecting 16%. we have 8% of gdp -- >> the gap. >> that needs to be closed credibly over time. you can't do that just by cutting spending. the short answer to your question is if all we were doing was raising taxes on dividends, that wouldn't be a great thing. but if that happens in the context of a credible program i think we all end up. this is a time where both sides need to give. the business community has been very clear hat what they want is compromise. >> and the business -- the business community would be willing to give two things like accelerated appreciation? you'd be okay with letting that go? >> absolutely. >> okay. >> but my assumption, too, is it's a better scenario for business generally and i think for the economy when you start making all these decisions that it's done in the context of a pro-growth tax reform policy. that lowers the corporate tax rate, lowers individual tax

rates, hopefully at the same time because of all the pass-through businesses we have out there. and does something to broaden the tax base. i mean, what we're concerned about right now is if you take all these tax rates go up, even limit on deductions occurs now, it really impairs our ability to reform the tax code for next year. which ultimately, in my view, is what needs to be done if we're going to fuel economic growth and get jobs going. >> i think simplifying the tax code, especially for corporations, is a very good thing. the amount of energy that's spent on trying to optimize your tax payment, as opposed to managing your business, is a tradeoff we shouldn't be making. so i agree with you entirely on that. i think the other piece of this is getting to entitlements. >> hmm. >> frits, want to thank you very much for coming in. >> my pleasure. >> coming up we're going to talk to an analyst about the surprising same-store sales numbers that we got from mcdonald's. plus jim cramer on other stocks you need to watch. twins. i didn't see them coming.

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welcome to the world leader in derivatives. welcome to superderivatives. welcome back. let's get down to the new york stock exchange. jim cramer joins us now. which is a real mcdonald's. jim, last month, to this month? >> i think they've made some changes and i think they're positive. i think this matters. i like the course of recognition

of things that screwed up. i'm saying this is the real one. we could be in for a couple of good months of run here. >> i saw pg&e had a good one, too. are you onboard yet? >> yes. i think for a while, mcdonald finally got tough and he's generating a great amount of cash flow. i think he had been too soft on the company and now he is delivering army ranger. didn't expect him to be too soft to begin with. he didn't realize how many firings he's had to do, how much money there was to be saved. >> jim, do you think anyone's selling apple because they have gains and they don't -- >> it makes so much sense from so many people. >> no one does it because of that, at first, i saw this thing last week, i got to hear from it again because i say one thing about apple? >> apple is a strange stock. it is actually owned by people in discretionary accounts. this is not viewed as being an

i.r.a. stock, 401(k) stock. it makes a lot of economic sense when you meet with a tax person and say, what's going to happen? give your property to your kids, they're going to change that, you ought to take some capital gains if you have them. apple's always in the crosshairs. you have jeffreys today lowering their price targets. i think this is kind of a research of, i can't take it anymore, the stock's gotten low, i'm at 900, got to go down to 800. i think the apple story for an investment is intact. but it makes -- the taxes grg up. no matter what, those taxes are going up. say, yeah, i'll take some off the table. >> exactly. do the math. >> it is the math. >> if you've got a lot it could be thousands of dollars. you can buy it back, right? >> joe, it is the answer. everyone's got a capital gain. the greatest capital gain generator of our time. there isn't a tax accountant or economic adviser in the world that won't say, take half off,

you can revisit it. that's a compelling logic. i wouldn't go against if. >> i love the "washington post," president, big backer of the president. they're even paying their dividends out. wouldn't it be nice if they said, here's your dividend, mr. president. do they have to go around the tax man, jim? does that seem right? >> everybody does. >> patriotic, i know. >> makes too much sense. >> thank you, jim. >> thank you. >> i'll see you down in washington, jim. >> of course. we're working together. it will be great. when we come back, our guest host this hour has been senator john thune. we'll give him the last word. "squawk box" will be right back. "squawk box" is bringing jim cramer live in washington. special guest, grover norquist, senators from both sides of the aisle.

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i think the last word has to be the focus on what a real deal actually looks like. what is something you could settle for? >> here's the thing, becky. it's got to be about growing the economy. whatever we do, we shouldn't put policies in place that take us backwards. nathan's done a lot of work on post-world war ii coming out of that period when we had real high debt-to-gdp, and our total debt is about 106%. how you deleverage that, you do it by budgetary restraint and budgetary growth. tax reform has to be about growth. that's why i'm really concerned about where we head on tax policies. >> the balanced idea, we hear this from both sides that it has to be a balanced deal. if you're looking at a balanced deal, what's a number you could live with, just in terms of revenue increases versus spending cuts? >> well, again, i -- >> i know you don't want to give a ratio, but something you could live with? >> i think what the speaker put

out last week is something he feels could pass the house. >> what the speaker put out and what the president put out were both opening offers. we know that's not the real negotiating behind the scenes. my guess is they had real numbers they talked about yesterday. >> hopefully they did. maybe we'll hear more about that. what concerns me, i guess, when you go above the number that the speaker put out there, i think you're going to start doing real harm to the economy. because you are raising taxes, and you can say you aren't, but you're hitting a lot of small businesses. you've got s corps and llcs that pay at the individual tax rate. there are millions of small businesses that employ more than 75% of the work force. >> do you think those businesses will get hit anyway? >> i think they will. and you don't want a bad deal. i think there's a deal in the making but the president and his folks have to realize there has to be something in there that they want. and i think that's amt, death tax, things that -- debt limit